How Much Will Premiums Go Up?

Notwithstanding earlier claims, it is very apparent that the health reform law is going to raise premiums and costs for everyone.  It is raising regulatory and technology costs for providers, which eventually find their way into prices charged to payers.  It is encouraging provider consolidation, which will lead to higher prices.  It has imposed taxes on a wide variety of health industry segments, including employers, insurers, medical device companies and others.  Those taxes ultimately will also be embedded in premiums.  It mandates benefits and freebies that did not typically exist in most insurance policies.  And it limits the ability of payers to underwrite either for coverage at all or to charge differential rates, which has the effect of raising all premiums.  Even the law’s proponents are freaking out over what is likely to happen next year.  And it appears that the law will differentially hit young and healthy persons, with potentially massive increases in premium rates, although how high is disputed.  The Urban Institute of the Robert Wood Johnson Foundation, which can always be counted on to provider apologist research for the reform law, suggests that there will be no rate shock.   (RWJ Report)   The paper does not deny that there will be a dramatic increase in rates, particularly for young people, but rather claims that subsidies and Medicaid will mute the actual financial effect.  However, in making this determination they ignore the effect of higher taxes that are needed to pay for the subsidies and the overall cost of the reform law, and poorer and younger people are not going to be immune to those higher taxes.  A number of actuaries will also beg to differ with the Urban Institute and their conclusions find their way into a report produced by Republicans on Congressional Committees overseeing health care. (Cong. Report)  Estimates of average premium increases in the individual market range from 32% to 40% and for younger people, as high as 200%.  And a large number of these single, young people are not eligible for subsidies.  This fall and next year are chaotic as the impact of mandated purchase of very expensive and unneeded insurance policies hits home.